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tv   First Up With Angie Lau  Bloomberg  August 12, 2015 7:00pm-8:01pm EDT

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♪ angie: how low will it go? the yuan faces another testy day and the spotlight. to cushionpped the fall. shuffling the pack. shaking up the team to inject some life into indonesia's slumbering economy. ."lcome to "first up gie lau.
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an intervention from the chinese central bank could not help the yuan. it has been the biggest route for the renminbi and more than 20 years. weakenedweekend -- rates. steve: this is the new regime. they allow the market to play a role in the fixing rate. they said it slightly lower and offshore and onshore, the yuan weakened considerably. waking -- weakening as much as 1.96%. the yuan can trade 2% on either side of that daily midpoint. it really does until these last couple of days. two days in a row it has touched the maximum loss barrier. 1.96%.
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angie: in the last 60 minutes? steve: we intervened, they intervened. half the losses, look -- closing lower. this is weakening and then here we go. they strengthened it here in the last 15 minutes of trading, closing at 6.385. it had depreciated as much as .4489. then the intervention. a viciouss facing cycle of depreciation. this is the conundrum that authorities will be faced with as they reform the mechanism but also want to have a little bit of a control on the currency. point, thet at some pboc will either abandon the
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implementation of this new fixing mechanism, it is only two days old now, and stabilize the fixing, or they will intervene heavily. the one good thing is they have a lot of reserves. 3.6 trillion u.s. dollars in fx reserves. the review coming later this year. angie: you might need to use it beyond profiting rates because apparently a co-data came out for july, retail sales not looking good. steve: this is the continued evidence that the economy is slowing. basically these currency moves are against the backdrop of weaker growth and that is complicating policymakers' efforts to provide some sort of financial stability as they are pushing out these reforms, as they get fdr inclusion. china industrial production worse than expected. let's look at fixed asset urban investment. the number worse than expected. were worse than
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expected. 10.5%. not bad but worse than expected. asian stocks fell heavily once again yesterday to the lowest levels since january. >> echoing what steve was saying, worse than expected. we had the regional benchmark index closing at its lowest since january. because concerns the devaluation of the yuan will crimp demand for commodities. we had noble group down by 11%. the south east asia stocks had their biggest two-day drop in four years, currently at a four-year low. a lot of selling coming through in the asian region.
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yesterday, hong kong exchanges were one of the stocks that did not do too well on the hong kong stock market. we sat down with the co and asked him what he thinks about the devaluation of the yuan. the beginning of the end of a new era. as -- tradedeated as allowing full market factor to become the determining rates. this is the most important step in that direction. the yuan devaluation is having a ripple effect. the russian ruble at its weakest level in six months. aussie as well, all these commodity related currencies taking a dive. the u.s. was sheltered? a bit of at was
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spectator sport because we had some wild swings. yesterday a little bit filtering coming through, a bit more buying. we saw some good guys coming through. some of those battened down stocks that have not been doing too well. chevron, exxon doing better overnight. apple was up 1.5%. we saw the s&p 500 erased its 1.5% loss. and bringing back its average price. a little bit more vying coming back in the u.s. signifies that we might see a little bit more calm. angie: will pboc let it drop without intervening or will it intervene? they had a briefing today. they're going to be a little bit more transparent area steve: there will be a briefing at 10:15 a.m. beijing time. they have put out a number of statements on their website
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saying they would keep the yuan fairly stable. the markets are taking a bigger role right now. we will get everything at 10:15 a.m. the world will be watching. it is not just about entering a currency war. it is about the resolve that the authorities have to go into a free market regime for the yuan. as a step toward convertibility eventually. we do not know when that will be. there was another thing i forgot to mention. banks toorities told limit some companies' dollar purchases because they will be -- there will be this out low. telling banks to limit purchases of dollars. angie: what about other currencies? we know there is a bank governor who is trying to talk down the aussie dollar because he wanted a weighted
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currency. but now is the currency almost getting too low? currency futures at the moment. the aussie dollar a little bit higher. -- the above that u.s. dollar yen has been wildly fluctuating as well. fall coming through. if the aussie dollar and k rate dollar -- commodity prices are falling as well. enforcere they going to inflation with the yuan? that is a question to ask as well. checking other headlines this morning. hit afor a bailout has problem with germany withholding support. the plan is incomplete and may not be agreed in time for next
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week's ecb payment. verizon governments must approve the plan before releasing up to $95 billion in aid. the former finance minister told the bbc that the bailout will not work. the cabinet meets today to ratify the term. news core is rising in extended estimatesite missing last quarter. revenue fell to $2.1 billion. the news division makes up two thirds of its revenue but sales were down 10%. . has been trying to boost earnings as readers prefer their news online. we will be watching telstra. profit of the biggest mobile provider fell 1% last fiscal year 24.2 billion aussie dollars. that was in line with expectations. the new ceo is looking to strengthen telstra's domestic
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dominance. when theelstra later ck braythe cfo warwi joins us. time for look at the e-commerce market in china as some big second-quarter numbers are released. it is a tale of two very different performances. we have zeb eckert with the diverting fortunes of alibaba .nd tencent will start with alibaba. asia's largest internet company is saying it's so still growth -- its slowest sales growth in years. investors do not like it. -- their global expansion has not kept pace with what the market expects. they have been trying to expand in the united states with limited success.
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jack month, the founder, has been on a roadshow there in recent they have limited success in brazil as well as russia. that does not cover the whole world. for a company of this size am a it took a hit in terms of the latest results. the stock down 5% in new york trade. a big tumble here and for jack move. -- and even bigger the amount his personal fortune has been produced by as a result of this latest number. challenging times indeed create we did hear from the company's ceo addressing a separate issue now at the time of earnings. the company's cooperation or alleged cooperation with the chinese government has taken a lot of flak for this area daniel zhang commenting. daniel: as a company they have a huge consumer base. serving millions of merchants. wheeler -- work closely with the government to follow the
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government policies and regulations and we will continue to do so and to make sure we are in compliance with the laws and regulations in china. seven: -- zeb: it is a tough time but there are some bright spots. the mobile business expanding and the numbers that mobile revenues were up on the order of 34% in the latest quarter. angie: an interesting partnership with macy's. what is this about? : they are trying to target the average consumer. it is a midrange department storebrand, very visible. macy's posts visibility. angie: $.10 on the other hand, the work has already been done. they did pretty well. : they are expanding rapidly content that the
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market in china cannot get enough of. it is delivering. record quarterly profit, the second-largest internet company in china only second to alibaba. the ad dollars are lucrative and certainly can bet jack ma and his colleagues at alibaba wondering perhaps how do we follow their footsteps? that. thank you for coming up next, we are heading stateside to discuss the latest market action. our next guest does not buy into talks the yuan valuation may delay the rate hike by the fed. we ask why. in twoup" been -- up minutes.
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angie: at least 13 people have
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been killed in chemical blasts in china. .t happened at a container hundreds more people are said to have been hurt. the victims were hit by flying glass and debris. the national earthquake bureau said the blast was the equivalent of 24 tons of dynamite. the opposition justice party said the money was used during the general election and his 26 times the amount that najib's alliance would have been allowed to spend. the money came from the indebted one mdb investment fund. wiki leaks founder julian to endingy be close his stand up with sweden. he has been holed up in the ecuadorian embassy in london for
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three years. of sex attacks including rape. two of the charges have been dropped because of the statute of limitations. ecuador is to open talks on allowing swedish police to speak to assange at the in the sea -- embassy. he is wanted in the u.s. were spying. -- for spying. u.s. stocks managed to avoid the selloff in asia and europe. we have got bloomberg's cris naji.y -- chris forgiven foruld be looking at the screen and saying nothing happened. that was not the case. things started off incredibly badly. down one point 5%. the s&p 500 flirting with the worst two-day selloff in seven or so months. and then ready much all of us
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in, the last two hours of trading, things turned on a dime. the market reached some technical levels that have taken on a lot of significance in the u.s. of late. everyone knows about them at this point. when the averages fall through, everyone expects them to hold and they did again. at the end of the day, the biggest rebound in two years by .ome definitions in the s&p 500 on another level, it is massive volatility. not a secure feeling to see the market go down and up this fast. it is trying to figure out what .he implications for china are figuring if it will sink the u.s. economy or delay the fed increase. you will see the market trying to answer this question these days. angie: these are all questions for our next guest.
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let's get more with kirk hartman , cio of wells capital management joining us live from l.a.. what are we to make of china's devaluation, what are the implications for the market? kirk: i look at this is china's monetary easing. china hopefully can get the economy under control and we can get back to more robust growth. views -- it in his is viewed as a positive and not necessarily a negative. angie: china is taking a look at probably treasury yields, they are down. we have volatility in the equity markets. a lot of economists saying probably going to import deflation into the u.s. what does that leave the fed to do in september? kirk: i do not think it will
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impact the fed. the u.s. economy is doing well. employment -- and implement is down and the u.s. economy is creating 225,000 jobs. don't forget oil and commodities are at a low level. the u.s. economy especially in certain sectors like small caps are doing very well. angie: you like small caps? kirk: i do. they're not infected by the strong dollar -- impacted by the strong dollar. there are a lot of small caps that are doing very well and notwithstanding this volatility, year to date, a lot of the small caps are up something like 5%. there are great companies, small caps that are doing very well. angie: how about your appetite for chinese stocks, what do you think about that, are you still willing to get in? kirk: i would be careful about
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any emerging-market stocks for market msciging index is down 20% from last september's high which is in bear market volatility -- territory. i would not be surprised to see slightly more did valuation and the yuan and i would be wary right now. i would say -- stay a bit away from the market area don't forget, china, given though we have had the volatility of 2%, granted, it was up 20% or 30%, but we are positive. you have to be prepared for more volatility in the next coming days. angie: volatility as well in the commodity markets and it is doing a ringer for asian economies that are main exporters of commodities like australia and malaysia. what do you think it will do to the commodity markets? the commodity markets are hitting bottom. economies and
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currencies will be impacted. there is a lot of equity. today what was interesting is you saw oil, gold, run materials and gold miners, things like that actually rebound because they think people realize they are getting to the bottom and oil and commodity in terms of decline and longer-term, it is a good high. buy.ood think especially in the u.s., the u.s. will benefit from the weaker commodity prices. no question, the economy frankly that worries me more and the country that worries me more than chinese brazil. brazil in real terms is down three of the country, there is a lot of option scandals and other issues. the country i worry mouth -- about more than china is brazil. angie: thanks for joining us out of l.a.
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that was kirk hartman. indonesia's president seeks to breathe life into his cabinet. we will have the details of the reshuffle when "first up" returns. stay with us. ♪
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angie: the president has shaken up his cabinet to breathe life into the economy.
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he has been criticized one year after winning power. we have a new economic team create what is the reaction? haslinda: some say it is not a game changer. changes, make the hopefullye people, that will provide investor confidence. includes a bit of the new and the old. the trade minister post goes to a harvard educated private equity investor. a has to concert -- counter growing accusation of protectionism.
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and he was identified -- this was identified as a priority. some investors say it is a competent team. angie: so are disappointed with the reshuffle. why? has linda: there is always disappointment and news of a reshuffle has been swirling around for months. some in the market where expecting big name changes. the deployment of people like the former finance minister, now ceo at the world bank. also some change will lead to delays in decision-making. we would have to to see if that
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angie: lenovo putting smiles on the faces of investors. first-quarter income eating estimates of $105 million. investors were coming -- calling for 178 million dollars. that is a big margin of outside for lenovo. first quarter earnings per share coming in a $.94 per share. 992hkve the ticker symbol which we will be watching when hong kong markets open. expenditure at $153 million.
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top stories this hour. trailing.ory numbers rose.rial output retail sellers -- sales were up more than 10%. the slowest growth is the turn-of-the-century. lowaba closed at a record in new york after reporting the slowest sales growth in three years. $68es are still above this paid in leicester's ipo. revenue rose $2.8 billion, misting -- missing estimates. conversion climbed 34% for the quarter. sales held -- helped
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10cent.-- is taking on alibaba. shares closed ahead of the earnings announcement. that may change later. let's get back to the top story. the falling yuan and the impact around the world. our emerging markets reporter joining us from new york. what has the reaction been from u.s. markets? reporter: it is interesting that the market seems to be slowly settling down after the initial shock. the s&p opened lower. the dollar retreated against major currencies. part of the reason is the yuan day rebound.
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that increased stability to the market. what does the devaluation mean for the currency rockets and the global economy in the long term? ye: it is ironic in that china is moving to a currency regime. this is what the u.s. and europe have in lobbying for for a long time. when it happened it created such a big splash into the market, creating additional volatility to the global market. the yuan and the economy have been an anchor of stability for the global economy. it survived the 1997, 1998 asian globalal crisis and the financial crisis in 2008 and 2009. it used to be 1% or 2% of the move is a big deal. for the chinese yuan.
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it looks like a daily move. -- that is almost like a new normal. long-term it is good for the global economy. in the short-term, it creates volatility. angie: the pboc's chief more about the yuan. what can we expect from the pboc? thethey are trying to calm market. there is a limit that the central bank will tolerate. they do not want to create a very volatile, violent move. it is not a free-floating currency yet. the second message they tried to send to the market is that we have things under control. we have enough of a capacity to deal with this kind of volatility. the message they tried to send to the market is we are not engaging in competitive devaluation.
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we are not engaging in a currency war. we are not going to achieve our ofget by the devaluing currency. these are the messages the are trying to send to the market and stabilize the market. so much,ank you joining us from new york. head of the operator of the hk exchange says that the valuation of the yuan heralds a new era charle. charles: this is the beginning of a new era where there is potentially going to be traded as allowing full market forces to become the determining factor of rates. we may not be very it, but this is the most important step in that direction, so, from that perspective, the timing of it is quite surprising when market participants are surprised.
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i do not think the rationale is surprising. people know this is coming and the government has been signaling this intention to make the bend whiter, make the trading come a make the market much greater in determining that. >> what does the devaluation of the yuan mean for the market? charles: now we are able to have enough for market that is a lot more resembling to the whole market. at the same time, we have important characteristics that market purchase a patient and have greater interaction into china and be the front line for renminbi to become more international overtime. juliet: there has been a few
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doubts that [inaudible] has been delayed. charles: you may be hearing noises that we are pushing through on the system changes and technology. upgrades.ystem and just so we get ready. in the end, this is going to be determined by them at a time that suits the overall agenda. because right now, the predominant focus has been on stabilizing the market. your outlookt is for further ipos?\ the number terms of of ipos accessing the market, it is bigger than the first half. the size of the ipo when people rank different markets is the value of the ipo's, and with the market coming down, you have a number of ipos second half.
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more earnings breaking news to tell you about. this time from singtel. that is a gain of 13% from one year ago. upgtel operating revenue is 2% to 3 billion u.s. dollars. a look at some of the top corporate stories on the bloomberg terminal. thed: let's talk about byting of jobs implement it new management. wants over $1 billion in annual cutbacks by the end of 2017. there was a drop in sales for
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the second quarter. let's talk apple. shares are in the midst of their worst retreat since 2012. it seems the slide is just getting started. hedge a factor against to clients have reached record proportions. apple has seen $13 billion wiped off its profit value since february. and after disappointing iphone sales last month. fourth quarter results meet expectations. revenue rose almost 4%. profit. sales rose 7% in the americas. 3% fall in china and a 40% drop in brazil. cisco did not announce any year-end job cuts for the first time in four years.
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those were the top corporate stories. more breaking one news to tell you about. a number of breaking news headlines hitting the bloomberg wire. there is a new man laying down bets for crown resorts. stepping down as krohn resorts chairman -- crown resorts chairman, replaced by rob rank in. packer will be named as senior executive director and it will continue to explore capital markets for financing. once again, james packer stepping down from crown resorts. prime ministers shinzo abe is expected to use the word apologies and aggression in a speech tomorrow marking 70 years since japan's world war ii surrender. his choice of words has been a source of tension between tokyo and it's asian neighbors along
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with territories in the east china sea. diplomacy has been frosty, tourism is thriving. we have yvonne man reporting from tokyo. yvonne: in the busy shopping district these days, chances are you will spot a chinese tourist enjoying a sale. >> we wanted to come experience of more developed country, to experience japan's culture. we bought the suitcase and then we stuff. we are about to go crazy. million people from the mainland are expected to visit japan area 2000 -- two thirds more than in 2014. ocean liners have doubled the number of trips from shanghai to japan. chinese tourists aren't not -- are not taking advantage of the weaker yen.
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the government has eased visa restriction and scrap the sales tax and shops here are quite economy being -- accommodating. inchures are translated chinese. the 70th anniversary of the world war ii defeat opened old ones. hard feelings have run for decades. but showing signs of a thought. >> i do not have hatred toward japanese people because we are too far away from that generation. it used to be but now, i think we are more accepting. hear chinese to being taught in the classroom here. these japanese students see the need to master mandarin. >> all my friends say, why china? i would like to be a chinese speaking guide for tourists. if i decide to work abroad, i
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think my chinese skills will be useful. yvonne: a opened their first tokyo capitals -- campus in april. classes are small with about 40 enrolled at the school expects to grow. chinese and japanese understand each other despite the criticism loading around. -- loading around. we have a better understanding and better than expected experience. same as the mainland chinese people who have been to japan. i think it is just lack of communication. translate intod better relations between two nations still coming to terms with their past. a generation ago it was going to school to learn japanese. let's go live to yvonne in tokyo. you spoke to tourists and locals during your time in japan. do they see hope for better relations?
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yvonne: you saw people that we talked to. there are signs of enthusiasm. the hope that this people to ofple exchange, the influx it will possibly change perceptions among this two nations and possibly even de-demonize chinese -- china and japan in each other's eyes. man who said he was surprised to see how common and similar the cultures of japan and china are and he wanted his son to come see them. old ones take time to heal. this were really left searing scars among the two nations. more than 85% of people from each country still have negative opinions about each other. not to mention japanese tourists heading to china, those numbers continue to fall as well. we will say. time will tell. we will be expecting the prime
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minister's statement tomorrow. is he going to follow his lead assessors in issuing an apology? we will have to see. it is expected to be slightly contentious. angie: thank you so much for that. yvonne man in tokyo. property bellman in thailand is one of the biggest players. we asked some -- a ceo what makes his company stand out from the crowd. much fullyery integrated. we are also servicing. we are also running a property -- property company. we restore the property, we are a sale broker. we are a concierge service. we are still looking at -- after our clients. angie: you can catch the full
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interview this evening. at 6liers comes your way p.m. singapore time. coming up next, what might be impact oning yuan's foreign markets. after this short break. ♪
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angie: hillary clinton may hand her personal e-mail server to the fbi after pressure from advisors and political opponents. classified information may have in past through the server which clinton used when she was secretary of state. she handed in 30,000 e-mails to the state department last year. the same number had been abated. -- deleted. former president jimmy carter has been diagnosed with cancer. revealedrgery which
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cancer in other parts of his body. he was america's 39th president. he founded the carter center to promote health care, democracy, and other global issues. he is the second oldest living president in history and his brother, two sisters, and parents all died from the disease. independent new york cabdrivers are taking on uber. the newly formed taxidriver owners association says the app has undermined their income by putting 25,000 new cars up against 13,000 regular cabbies area drivers say the value of their medallions has plunged, putting retirements at risk. they complained about search uber chargese more when demand is high. act to our top story. that is the chain reaction from china's evaluation of the yuan. joining us now is patrick
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bennett. were you surprised by the move? patrick: i was surprised. it came out of nowhere. it shocked everyone. the volatility is testament to that. towardit has made moves trying to get into consideration by the imf for fdr writes. good tip.his is a we realized that the currency being cap stable against the dollar was probably not a good situation. the fact that chinese authorities deemed it is appropriate to change hold them in good stead. effectwhat is the ripple ? what do you take a look at in terms of the universe of bets that you can make? and what does the yuan devaluation mean?
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patrick: we need to realize why the this has happened now. since 2005, the yuan has appreciated 40% on a trade-weighted basis. that is inappropriate given how soft the economy has been or how the economy has lost momentum. this is a china story. it is not -- this is not a message to buy dollars. this is a message to adjust the value of the yuan against other currencies. angie: i have some breaking news that we need to share with viewers right now. that is japan's machine orders falling. they expected a drop of 4.8%. looking at the year on year change, orders rose 16 point 6% versus estimates for a 17.6 percent rise. disappointing news for japan.
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they have massive exposure to china. patrick: it is a very volatile series. the numbers out of japan rok. japan has very strong exposure to china and if we look at chinese trade numbers that we saw last weekend, the exports to japan have been very weak. that may be a result of the weakness in the japanese yen. we have seen some weakness in the yuan. perhaps we can see some stalling and turnaround. that would be good for both economies. sell the economies which the most to china are most vulnerable. that is taiwan, korea him a -- korea,, the two that stand out. weaker chinese demand [inaudible] so the economies are at risk. angie: we're seeing volatility for the yuan. when south korea makes it
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monetary policy decisions, they may have to cut. patrick: they have cut already to now. the weakness probably stays ahead just for the moment. we are not looking for others to adjust. not to match the pace of dollar china. the biggest focus will be on the fix at 915. thank you. next, a japanese construction company gets a buy recommendation from jeffries. " returns."first up ♪
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angie: we are taking a look at the opens in japan and south korea. >> i am looking at toyota. it maintains services. over the past two days, two
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analysts came up with a high recommendation. jeffries came out this morning and said it is overweight, buy the stock. juliette: i am looking at a company based out of japan. it came out with the first-quarter operating loss. expected to be under a bit of pressure today. >> we'll take a taxi from time to time. content toing about -- kontetsu group. the latest results of 22%.
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all hailt's see if we zeb when the markets open. back in an hour. a lot more comin
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mark: i'm mark halperin. john: and, i'm john heilemann. "with all due respect" to that "vanity fair" story about tinder that has everyone all fired up -- ♪ john: not that i have any idea what tinder is. mark: it's a web thing or app. john: internets, i don't know. happy national julian fries day. lineup tonight a doctor, a , lawyer and a monster. first, the server. after months of saying she will never do this, hillary clinton is handing over to the fbi her infamous private e-mail server as well as at least one thumb drive with copies of her e-mails. an inspector general for the intelligence agency t